NASDAQ:FBLG
READ THE FULL FBLG RESEARCH REPORT
We are initiating coverage of FibroBiologics, Inc. (NASDAQ:FBLG) with a valuation of $11.00. FibroBiologics is a biopharmaceutical company that is developing fibroblast-based treatments for chronic diseases with a large unmet medical need. The company has three lead development products: CYWC628 for the treatment of diabetic foot ulcers (DFUs) and other chronic wounds; CybroCell™ for the treatment of degenerative disc disease, and CYMS101 for the treatment of multiple sclerosis (MS). The company recently presented preclinical data showing that in a diabetic mouse model with mice harboring wounds resembling human DFUs, treatment with human dermal fibroblast spheroids led to a 60% decrease in relative wound area within four days post-treatment along with upregulation of pro-inflammatory cytokines and increased levels of growth factors. We anticipate the company obtaining approval in 2024 to conduct a Phase 1/2 clinical trial in diabetic foot ulcers (chronic wound) in Australia in 2025.
Fibroblasts Have Numerous Advantages as Cell Therapy
Fibroblasts and stem cells are two of the main types of cells in tissue regeneration and repair. In regards to being used for cell therapy, fibroblasts hold a number of advantages over stem cells in that they can be non-invasively harvested from a variety of skin donors, have a faster doubling time when grown in culture, possess superior immune modulatory activity, and are more economical to isolate, culture, and expand.
Strong Preclinical and Early Clinical Data
The company has published data showing that human dermal fibroblasts (HDFs) enhanced intervertebral disc repair in a rabbit model of degenerative disc disease through a reduction in inflammatory markers, increased collagen type II expression, and were not immunogenic. In a small, first in human study of five MS patients with a safety primary outcome, a single infusion of HDFs did not result in adverse safety events. As a secondary outcome, efficacy was noted as improvements in the Nine-Hole Peg Test and the Paced Auditory Serial Addition Test. Due to a low number of patients enrolled in this primary safety, first in human trial, the secondary outcome efficacy data obtained was not statistically significant. A phase I/II clinical trial with a higher number of enrolled patients needs to be conducted to obtain statistically significant efficacy data.
Targeting Multi-Billion Dollar Opportunities
FibroBiologics is developing fibroblast therapies for the treatment of DFUs and other chronic wounds, degenerative disc disease, and multiple sclerosis. The global wound care market is currently valued at approximately $17 billion, with more than half of that generated in the U.S. and E.U. The global degenerative disc disease market is valued at approximately $26 billion. Worldwide sales for MS products were approximately $21 billion in 2023. The global psoriasis market was valued at $26.4 billion in 2023.
Strongest IP Among Fibroblast Companies
FibroBiologics was formed in 2021 as a spinout from FibroGenesis, which included a patent assignment agreement and intellectual property cross-license agreement. A total of 48 patents and 109 patent applications pending derived from jurisdictions all over the world were assigned to FibroBiologics. The IP portfolio includes patent applications pending for composition of matter for both CYMS101 and CYWC628.
Valuation
We value FibroBiologics based on the potential for the company’s different fibroblast-based therapies. Given the early stage of development for each of these candidates we are estimating peak sales at a minimum of 10 years into the future for each of the products, thus we caution investors that these estimates have a very high degree of uncertainty associated with them, which has been accounted for by applying a low probability of approval into our model.
For CYWC628, we model for approval as a therapy for diabetic foot ulcers, burns, and surgical wounds. For diabetic foot ulcers, based on the preclinical results presented so far, we believe if those results can be replicated in the clinic there is a chance for approval following the upcoming Phase 1/2 trial, thus we currently model for approval in 2027 and peak revenues of $500 million seven years after approval. For use in burns and surgical wounds, we model for approval in 2030 with peak sales of $400 million (burns) and $700 million (surgical wounds). Using a 4x multiple to peak sales, a 20% probability of approval for each indication, and a 20% discount rate leads to an NPV for DFUs of $81 million, for treatment of burns of $37 million, and for surgical wounds of $65 million.
For CybroCell, based on the preclinical results presented so far, we believe there is a chance for approval following the upcoming Phase 1/2 trial, thus we currently model for approval in 2028 and peak revenues of $1 billion seven years after approval. Using a 4x multiple to peak sales, a 20% probability of approval, and a 20% discount rate leads to an NPV of $135 million.
For CYMS101, the development of MS therapies is long and expensive, thus we model for approval in 2033 and peak sales of $2 billion. Using a 4x multiple to peak sales, a 15% probability of approval, and a 20% discount rate leads to an NPV of $65 million.
Lastly, for the treatment of psoriasis, we model for approval in 2032 and peak sales of $1.5 billion. Using a 4x multiple to peak sales, a 20% probability of approval, and a 20% discount rate leads to an NPV of $78 million.
Combining the NPVs for each of the indications along with the company’s current cash position and anticipated financing of $50 million leads to a total valuation of $539 million. Using a fully diluted share count of 48 million (38 million currently fully diluted plus an additional 10 million shares for financing) leads to a valuation of approximately $11 per share.
SUBSCRIBE TO ZACKS SMALL CAP RESEARCH to receive our articles and reports emailed directly to you each morning. Please visit our website for additional information on Zacks SCR.
DISCLOSURE: Zacks SCR has received compensation from the issuer directly, from an investment manager, or from an investor relations consulting firm, engaged by the issuer, for providing research coverage for a period of no less than one year. Research articles, as seen here, are part of the service Zacks SCR provides and Zacks SCR receives quarterly payments totaling a maximum fee of up to $40,000 annually for these services provided to or regarding the issuer. Full Disclaimer HERE.
